PPT on BOP, BOt

Pankaj Phand Roll No-222606

The International Marketing Environment

7

3. ECONOMY

Environmentaluncontrollablescountry market A

Environmentaluncontrollablescountrymarket B

Environmentaluncontrollablescountrymarket C

1. Competition

1. Competition

2. TechnologyPrice Product

Promotion Place orDistribution

6. Geography andInfrastructure

Foreign Environment(Uncontrollables)

7. Structure ofDistribution

3. Economy

5. Political-Legal

Domestic environment(Uncontrollables)

(Controllables)

2 .Technology

4. Culture

5. Political-Legal

4. Culture

Target Market

Introduction

Proliferation of trade and emergence of the global economyProliferation of trade and emergence of the global economy

Intensification of global competitionIntensification of global competition

More emerging marketsMore emerging markets

Developments in technology allow communications with global consumers and movement of goodsDevelopments in technology allow communications with global consumers and movement of goods

21st Century: The First Decade and Beyond

With exception of China, slower economic growth in U.S. and other countries is currently evident.With exception of China, slower economic growth in U.S. and other countries is currently evident.

Faster growth rates expected in developing countries such as Brazil, China, India, Indonesia, and Russia.

Faster growth rates expected in developing countries such as Brazil, China, India, Indonesia, and Russia.

More trade expected within emerging markets, regional trade areas, and the established markets in Europe, Japan, and U.S.

More trade expected within emerging markets, regional trade areas, and the established markets in Europe, Japan, and U.S.

Companies need to be more efficient, improve productivity, expand global reach, and respond quickly.

Companies need to be more efficient, improve productivity, expand global reach, and respond quickly.

Greater growth in international sales expected by smaller firms.Greater growth in international sales expected by smaller firms.

Balance of Payments

1. When countries trade money flows into and out of each country

2. The accounts that record a nation’s international financial transactions are called its balance of payments (BP)

3. Records all financial transactions between a country and the rest of the world over a year

4. The BP is maintained on a double-entry bookkeeping system

Balance of PaymentsThe difference between receipts and payments

• costs of goods exported.

• money spent by foreign tourists.

• transportation.

• payments of dividends and interest from FDI abroad.

• new foreign investments

BP Receipts

• costs of goods imported.

• spending by tourists abroad

• new overseas investments.

• cost of foreign aid.

BP Payments

Balance of PaymentsThe Balance of Payments includes three accounts:

(1) current account(1) current account (2) the capital account (2) the capital account

(3) the official reserves account(3) the official reserves account

Balance of Trade

(1) current account(1) current account (2) the capital account (2) the capital account

(3) the official reserves account(3) the official reserves account

• If exports exceed imports, The Balance of Trade is positive

• If imports exceed exports, the Balance of Trade is negative

• Is a negative balance bad?

Balance of Payments and Exchange Rate

The Exchange Rate is determined by Supply and Demand

To buy Canadian goods, Canadian currency is demanded

More exports or direct investment will increase the exchange rate

As the value of the dollar increases, the price of exports increases.

Protectionism: Logic and Illogic

Countries use protectionist measures to shield a country’s markets from intrusion by foreign competition and imports.Countries use protectionist measures to shield a country’s markets from intrusion by foreign competition and imports.

Arguments for Protectionism include:

1. Maintain employment and reduce unemployment2. Increase of business size3. Retaliation and bargaining4. Protection of the home market 5. Need to keep money at home6. Encouragement of capital accumulation


1. Maintain employment and reduce unemployment2. Increase of business size3. Retaliation and bargaining4. Protection of the home market 5. Need to keep money at home6. Encouragement of capital accumulation



7. Maintenance of the standard of living and real wages

8. Conservation of natural resources9. Protection of an infant industry10. Industrialization of a low-wage nation11. National defense


7. Maintenance of the standard of living and real wages

8. Conservation of natural resources9. Protection of an infant industry10. Industrialization of a low-wage nation11. National defense


In general, protectionism contributes to industrial inefficiency and makes a nation uncompetitive

Protectionism is implemented through the imposition of trade barriers, which include tariff barriers and non-tariff barriers

The Impact of Tariff (Tax) Barriers

Tariff Barriers tend to Weaken:1. Balance-of-payments positions2. Supply-and-demand patterns3. International relations (they can start

trade wars)

The Impact of Tariff (Tax) Barriers

Tariff Barriers tend to Restrict:1. Manufacturer’ supply sources2. Choices available to consumers3. Competition

Six Types of Non-Tariff Barriers

(2) Customs and Administrative Entry Procedures:1. Valuation systems2. Antidumping practices3. Tariff classifications4. Documentation requirements5. Fees

(2) Customs and Administrative Entry Procedures:1. Valuation systems2. Antidumping practices3. Tariff classifications4. Documentation requirements5. Fees

(1) Specific Limitations on Trade:1. Quotas2. Import Licensing requirements3. Proportion restrictions of foreign to

domestic goods (local content requirements)4. Minimum import price limits5. Embargoes

(1) Specific Limitations on Trade:1. Quotas2. Import Licensing requirements3. Proportion restrictions of foreign to

domestic goods (local content requirements)4. Minimum import price limits5. Embargoes


(3) Standards:1. Standard disparities2. Intergovernmental acceptances of testing

methods and standards3. Packaging, labeling, and marking

(3) Standards:1. Standard disparities2. Intergovernmental acceptances of testing

methods and standards3. Packaging, labeling, and marking

(4) Government Participation in Trade:1. Government procurement policies2. Export subsidies3. Countervailing duties4. Domestic assistance programs

(4) Government Participation in Trade:1. Government procurement policies2. Export subsidies3. Countervailing duties4. Domestic assistance programs


(5) Charges on imports:1. Prior import deposit subsidies2. Administrative fees3. Special supplementary duties4. Import credit discriminations5. Variable levies6. Border taxes

(5) Charges on imports:1. Prior import deposit subsidies2. Administrative fees3. Special supplementary duties4. Import credit discriminations5. Variable levies6. Border taxes

(6) Others:1. Voluntary export restraints2. Orderly marketing agreements

(6) Others:1. Voluntary export restraints2. Orderly marketing agreements

Monetary Barriers

In addition to the Six Types of Non-Tariff Barriers, monetary barriers are also used by countriesIn addition to the Six Types of Non-Tariff Barriers, monetary barriers are also used by countries

Three types of monetary barriers include:

1.Blocked currency

2.Differential exchange rates

3.Government approval

Three types of monetary barriers include:

1.Blocked currency

2.Differential exchange rates

3.Government approval

World Trade Organization (WTO)

1. It sets many rules governing trade between its 132 members

2. WTO provides a panel of experts to hear and rule on trade disputes between members, and, unlike GATT, issues binding decisions

Unlike GATT, is an institution, not an agreementUnlike GATT, is an institution, not an agreement

The International Monetary Fund (IMF)

1. IMF was created to assist nations in becoming and remaining economically viable

2. It assists countries that seek capital for economic development and restructuring

3. IMF loans come with stipulations that borrowing countries slash spending and impose controls to curb inflation

4. It helps maintain stability in the world financial markets

Objectives of the IMF include:1. stabilization of foreign exchange rates 2. establish convertible currencies to

facilitate international trade3. lend money to members in financial

trouble

Objectives of the IMF include:1. stabilization of foreign exchange rates 2. establish convertible currencies to

facilitate international trade3. lend money to members in financial

trouble

World Bank Group (WBG)

The functions of the WBG include:The functions of the WBG include:

The goal of WBG is to reduce poverty and the improvement of living standards by promoting sustainable growth and investment in people.

The goal of WBG is to reduce poverty and the improvement of living standards by promoting sustainable growth and investment in people.

1. lending money to countries to finance development projects in education, health, and infrastructure;

2. providing assistance for projects to the poorest developing countries;

3. lending directly to the private sector in developing countries with long-term loans, equity investments, and other financial assistance;

4. provide investors with investment guarantees against “noncommercial risk,” so developing countries will attract FDI; and

5. provide conciliation and arbitration of disputes between governments and foreign investors

Protests Against Global Institutions

In 1999 “anti-capitalist protestors” complained against the WTO and IMF, over the unintended consequences of globalization that include:

In 1999 “anti-capitalist protestors” complained against the WTO and IMF, over the unintended consequences of globalization that include:

1. environmental concerns 2. worker exploitation and

domestic job losses3. cultural extinction4. higher oil prices, and 5. diminished sovereignty of

nations

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PPT on BOP, BOt